high tech. amazon, apple, facebook, and alphabet beat expectations. the sharpest gdp contractions on record. more data later this morning. bnp paribas reports blowout performance and fixed income trading, leading all but one of the large wall street banks.

good morning and welcome to "bloomberg surveillance," i'm francine lacqua. the focus firmly on earnings. impetuso give a bit of to industry groups. european stocks rising. we had pretty good earnings for american tech giants. speaking of economic data and some of the bad data we had out thee, we are also getting italian gdp figure. -15 and itmate was fell less than perspective. somee also getting breaking news out of the bank of japan. let's get straight to the bloomberg first word news. the spanish and french

economies have suffered their sharpest contractions. output dropping 13.8% in the quarter. the eurothe whole of area comes out at 10:00 a.m. and is expected to show a 12% slump. talks in washington over a new pandemic relief package making little progress. senate republicans are planning to vote. it must be part of a comprehensive plan. it gives republicans a chance to say they tried. the u.k. has reimposed lockdown restrictions across parts of the north of england. some britons have been failing to it here to social distancing measures. today, they will no longer be able to meet indoors with people from other households. chinese president xi jinping is

calling for reform. that chinaeeting should focus on boosting local output. the speculation is to reduce reliance on the international economy. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine? francine: thank you so much. america's biggest tech companies saw their earnings surge while the rest of the economies being showred, quarterly results the industries capitalizing on gothe crisis and consumers to tech for the entertainment shopping and learning. net income of $29 billion in three months ending. our tech analyst joins us from bloomberg intelligence. if you look at what was behind the beat, is it simply the way

we worked and what were they saying about forward guidance? >> it is the way we work. perhaps the way we are living now. i think one of the biggest the generally of surprising numbers was facebook advertising revenue. you compare that and the ad revenues were down eight percent more broadly in the second quarter. really some performance down to instagram. buying things perhaps we did not expect to buy. brilliant platforms to help advertisers to get you to buy stuff. the really big standouts. also the continued addiction with the iphone. 26 billion sales.

just kind of continuing. is there anything we should worry about? is there anything that should make us question what tech companies will do next? >> i think in terms of what the companies are doing, not really. facebook has short-term issues. generally, these companies are operating well. externalityrisks of , washington, and brussels, antitrust issues, and that dominance. i think their single biggest risk continues to be whether there is some kind of force to break up or some kind of new rules and regulations that disrupt to the way they are operating today, which is helping them to be such a dominant platforms in the u.s. and to killer.

matthew, thank you so much. earlier, we spoke to the bnp paribas cfo and asked if the banks would maintain guidance with the surge of coronavirus cases. >> this is the range where we anticipated there will not be a second nationwide lockdown. results of at the this quarter, it is in line for us to confirm that. your gdp was boosted by the volatility in the markets. worried that these exceptional market volatilities will be less supportive and the common market? it, there has at

been a high demand because institutional, but also corporate sovereigns were active. they were about what you would have and they will probably taper a bit off. however, as we are able to serve customers because of our financials because of all the services we have, we have been andng both a market share that above market share being there for clients old is basically something we anticipate and to sit -- something we anticipate in the second half. >> [indiscernible] do you also anticipated recovery there? lockdownpact of the had an impact in april and somewhat in may. activity, thethe

tapering uptivities again to levels which are pre-covid. that basically would be tapering up. shortages will take time. that will basically be not before. when do you anticipate the full recovery? can you give us a little bit >> it is a little bit stronger in some, it is a bit lower in others. if you look at the overall pick level, weback to the don't think that will happen before 2022.

>> the ecb recommended to haul dividend payouts, are they willing to follow this recommendation? >> supervisory authorities recommended until the end of the year. one assumes that when the at that moment, there was a return to normal, meaning the regulatory rules that are applicable pre-covid. that will be toward the planned dividend policy. anticipates returning to the 50%. francine: that was the bnp paribas chief financial officer. coming up, the initial shock of the pandemic has not been fully hedged -- we speak to the chief

financial officer of the world second-biggest reinsurer next. this is bloomberg. ♪

francine: economics, finance, politics, this is "bloomberg surveillance." says that the worst effects of the coronavirus is already hedged. the world's second-largest reinsurer surprised markets. that claimsadded and reserves are there to cover the majority of losses. joining us is the chief re.ncial officer of swiss when you look at how many more losses we could see from covid-19, how difficult is it to

model central lockdowns and the number of companies that will be affected by this? offrancine, we have a series scenarios we have run based on the first half of the year. we believe we have a pretty good handle on the losses which are likely to come. we believe most of the insurance thees were incurred in first half of this year. it is due to the fact that the the pandemics yes, there will continue to be flareups. a combination of better and the subsequent

reduced mortality means that the majority of the losses seems to be passed us. mean in: what does that terms of the next 18-20 months in terms of panning out? >> we will obviously continue to update projections along the way. what we see in the macroeconomic reduction ofor interest rates in the u.s. in that pricemeans increases will have to continue to be strong. we have seen that and we expect to continue to support a better underwriting process in the past year. this pandemico losses, we will see how things play out. we believe most of asia has

moved on even of places like tokyo or singapore do see some challenges along the way. we have got this down to a much different level of infections and deaths. wildcardis a bit of a where you see different reactions. francine: what are your expectations for the rest of europe? are there any regions or region that looks particularly vulnerable right now? the one place where uncertainty remains in the u.s., we see in the states hit hard in april a curve not unlike what you see in european countries and other places like texas, florida, california, big states

with large populations. numberssome of the peak of infections come up in july. what we think is for our own book of business, continued exposure to u.s. mortality, the actual number of death is something we will closely monitor the second half of this year. there was also a specific line in the insurance business of paymentsich results in related to actual results. the state aid in european countries in particular has seen the cushion, but we see the overall economic climate. you will see different claims coming through in this space. francine: what do you plan to do with the proceeds? >> we were able to close last week with the phoenix group. it is good for us.

it is good for phoenix. this is a strong business which reaffirms their business model, i think. we have a combination of 1.2 billion pounds of cash payment and shares in the phoenix group. cash is coming to bolster our already strong capital. it is a very strong demand. francine: are you planning any share buybacks or is it too risky? >> the corona losses have been significant, obviously. we have suspended the share buyback for 2020 together with our board of directors. in the meantime, we are committed to managing what is a fairly strong dividend performance over recent years

and will continue to be able to manage -- to pay the kinds of dividends that people would expect from the group. francine: thank you for joining us, the cfo from swiss re. billg up, there is a new in town. the gop and democrats agree more stimulus is needed, but not on how much. that is coming up next. this is bloomberg. ♪

>> i think the world is waking up. >> we have to take a special look at race. >> we are doubling down on our objectives. internationalism, what is the centerpiece. we should strive for equality. >> we are developing women from an early stage in their careers, bringing women in where we have an opportunity. would be great to have a woman or someone from a minority background to be my successor. >> unleashing at the right level of sin yorty the energy of female colleagues is to provide -- seniority the energy of female colleagues to provide the

most growth. >> making employees feel comfortable and welcome inside the walls of barclays. >> we are already taking real actions in the development of our talent that we also will come up in the year to come. >> i do think society needs to respond robustly. francine: a number of executives telling bloomberg how they plan to address the issue of diversity in their country. let's turn to the u.s. the gop and the democrats have new stimulus bills, but there is a massive gap between the parties. the relief package that congress has passed in march was the most aggressive in history, but it did not reach everyone. there were significant disparities by income, race, and ethnicity in terms of who received the money. joinsre on this, jennifer us now. jennifer, great to speak to you, as always, thanks for the great

work you do. what was the problem with the last bill and who got left behind? jennifer: nice to speak with you to this morning. even though there were loose disbursements and they were historic, there were still a significant amount of people who still to this day say that they never actually got any of the benefit payments. as negotiations are continuing for a new stimulus, state and employment agencies are still so backed up with claims that more than $100 billion worth of benefits owed has not actually been paid yet according to bloomberg calculations this week. it is hitting black and brown communities particularly hard. especially black-owned small businesses. some of the issues with the previous stimulus was the payment protection program or ppp. some of the underreported issues included the fact that black business owners had problems applying for the loan. some formerly incarcerated business owners were excluded altogether.

meanwhile, other white owned business owners did not have as much of a difficult time some of these black business owners. if you take all of that into account, plus the fact that black people as you mentioned because of the structural issues here in america are already further behind than white people, and you combine that with the disproportionate impact of covid-19 on minority communities, this has gone from a bad situation to an even worse situation. the clock is really taking on lawmakers to address some of these issues in the next relief bill. francine: jennifer, benefits expire today. lawmakers are at a standstill. what needs to happen now? jennifer: one of the biggest hang ups in these negotiations is this $600 a week unemployment that unemployment workers are getting on top of their own benefits. that ends today. july 31. democrats want to extend it with added benefits.

republicans are having a bit of infighting going on within the party. some of them want to lower the amount. others want to let states handle unemployment. but as i was saying before, unemployment agencies within the states already are pretty broken systems. this could create a real problem for workers who are already really set back by what is happening with the pandemic, so the current impasse about relief might continue in the next few days and we will have to watch it closely. francine: thank you so much for joining us, jennifer. show,miss our quicktake jennifer's quicktake show at 6:00 p.m. u.k. time on facebook. this is bloomberg. we talk u.s. gdp next. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." i'm francine lacqua, here in london. let's get straight to the bloomberg first word news with laura wright. the french, spanish, and

italian economies have suffered sharp contractions. down 18.5% for three months. data for the whole of the euro area comes out at 10:00 a.m. and is expected to show a 12% slump. president trump has raised the idea of postponing the presidential election. he says it should be delayed until people improperly, securely, and safely vote. it is something he does not have the power to do alone and would need the backing of congress. mitch mcconnell says the election date is set in stone. bnp paribas has said there is a performance blowout in fixed income. 150% from a year earlier. the french economy does not see a recovery from the coronavirus crisis for a couple of years.

>> it will be stronger in some, slower in others. so as we said, we should look at -- before it is back to the level -- we don't see that mid-2023.before global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more this is countries, bloomberg. francine: the u.s. economy suffered its sharpest downturn since at least the 1940's. rose domestic product shrank 5.5%. the comic devastation that has resulted from the government shutdown and highlights the need for urgent fiscal action. >> we had a very big hit in the first quarter, and the 32.9 record contraction is yet

another confirmation of what a big blow the global economy took. the headline gdp told us about the shift that happened in q2. >> the fiscal responses to try to keep things moving until there is progress on the backseat. we think that is a comparatively balanced case. andf congress does nothing lets those rolloff, you will see a sharp contraction in overall consumer activity. you will see a pullback in consumer spending and a worsening of the economic outlook. >> if the covid situation worsens in the u.s., you will see a downturn that is inevitable. >> without the fiscal stimulus which we have incorporated at $1 trillion, 1.5 trillion dollars, if that is not coming through, that would lower our expectations for q3 and q4. >> if we don't get fiscal action, then we will go backwards. francine: joining us with the

latest is nikhil srinivasan. you make us always smarter about how you -- how we should look at the markets and look at growth. what is strange last month is that we see more lockdowns and we certainly see a resurgence of the virus. what does that mean for the economic recovery that you are expecting now? >> when i first came on your show in march, we have had a nice move. i think now we are in this u.s. market, in a range where the market is going to be heavy . . i don't see this as a second and third wave in the u.s.. it is still part of the first wave. about are more cautious spending money, etc., so you will see a good q3 relative to q2, but it will not be as

dynamic as we expect. .1. .2 come you have an election coming up. typically if you look at this period, elections worry markets. first and the election, every single election cycle -- that is also going to wear on markets. third thing, financial engineering. buybacks continue but at a much, much lower pace. -- of this would suggest fourth, tech and health care is really representative of the economy. it was a clear buy, and now to be agnostic, i would want to get out. in other parts of the world, other asset classes are more exciting. francine: what are those asset classes that look exciting right now? nikhil: euro is the most

exciting, followed by chinese assets. what happens in the recovery less in gdp,llion it is the intent that is massive. joint insurance paid out through the european budget is unbelievable, switch adds to the fact that there is a differential between the u.s. and europe, a political differential. the people don't always think about or focus on is global central bankers. europe is down 20%. that goes down three or four percentage points -- for me, i want to be long europe, i want to be long chinese assets. china is doing much better on a gross basis than anywhere else in the world today. you can see the -- on a growth basis than anywhere else in the world. you can see the pmi numbers. chinese equities, chinese

high-yield, i want to be long on. i want to belong on chinese government bonds. buy euro, buy singapore dollar, buy chinese assets. on the chinese assets, do you worry about politics between the u.s. and china and the possible trade war? it seems president xi many days is fighting against the u.k. and against the u.s. what if it translates into economic penalties? nikhil: i think you are right. the fights are going on again with several countries. i cannot focus on that. i cannot focus on market and investment opportunities. i don't see many in the u.s. europe is good. europe does well when china does well. european stocks are interesting as well.

returning tohat chinese assets look very good today. high-yield is getting 8%, 9%, in -- what you will get so to me, i would put the tensions to one side and just as yourself, or chinese assets investable today? i am not alone in this? if you look at the foreign capital flowing into chinese government bonds the last two or three years, it has been substantial. every 3% yield in chinese government bonds. where do you get 3% in any government bond today at that rating? nowhere. francine: what do you do with gold right now? nikhil: we talked about it and i said maybe we should have precious metals. is -- thek gold reasons for buying gold with

negative interest rates, we have this whole situation with covid cannot lookre -- i at markets more than six months at a time. there is too much uncertainty. six-month in i don't see inflation, six-month in i don't involvement innt our economies is going to keep going up and sustain. having said that, there's probably some upside, but without negative real rates in the u.s. prompting more substantial to where they are today, i cannot see gold going from 2 to 3 that quickly. i think a lot of people have done well in gold are finding reason to support the argument. i'm always worried when you try to find support for an argument. i don't know, i just don't see inflation. i just don't see inflation, and

i don't see negative yield in the u.s. going to -.9 today to say minus two pretty -- to say -2%. francine: thank you so much, nikhil srinivasan. he stays with us, and we will talk more about the markets. coming up, france, spain, and lows and funds. coming up next. this is bloomberg. ♪

francine: this is "bloomberg surveillance." i'm francine lacqua, here in london. that's get to the bloomberg

business flash laura wright. has moved up -- they were largest tech company a stock split after shares emerged 80% in the past year. the next iphone will be delayed by a few weeks. facebook is rebounding from a pandemic drop in digital advertising. second-quarter results topped estimates with revenue rising 11%. the social network lost 2.7 billion in monthly attributes over the next three months. alphabet's revenue fell for the first time in the company two decade history. pulling back on spending during the pandemic. up sales were down 8% over the next year, but they were picking up by the end of the quarter. google and youtube continue to be strong.

amazon has crushed expectations, posting a record profit for the quarter. the online retail giant spend more than $4 billion in the three months. cleaning where houses and keeping employees at work. it seems to have paid off as customers switched to buying groceries and supplies online. that is the bloomberg business flash. francine? numbers: euro area gdp have highlighted the economic damage inflicted by coronavirus. france, spain, and italy saw growth plunge in the second quarter as lockdowns occurred in the second quarter. at 10:00 a.m., gdp numbers expect to show a contraction of 10%. nikhil srinivasan is still with us. you said your starkest conviction right now, one of your starkest convictions is actually buy euro. are there any other assets in europe that you find attractive at the moment? nikhil: i think european stocks

are interesting because global investors are underweight here. gpsu.s. with massive growth, now i think it will turn a little bit. -- i think ona the growing side of europe is doing very well, like the germans who have done a good job. i think we have a better situation with covid. you have underweight investors, and so we have got the benefit now of a closer e.u. thanks to the recovery fund. and you have got a support in the ecb. on the other side, you have u.s. wouldons, and to me i have a bias toward european stocks, and the european indices have more cyclical anyway, which benefit from growth in china.

are --l stocks in europe benefits from growth in china europe,w stability in and that will be good. where do you like -- i mean, what kind of stocks do you like in europe? is it the big international ones? is there a specific sector, or is it country specific? cyclical, asset heavy, anything that will benefit from growth in revenue with fixed costs. it is not specific to a country. international is good if you have asian exposure, particularly china exposure. will --heavy industry if you wanted to look for something, i would look for asset heavy countries. i would rather not get into a value debate. i am agnostic again on that, but i think that combination could

do decently. know, ithe reasons you would just say things change. make -- we reach a section point with agreement, and that changes things. francine: i know you don't want to talk about valuations, but what do you do with a lot of the technology stocks right now? we have had good numbers and we saw that yesterday, but then they look very expensive. i'm not talking about the european ones, i'm talking about the worldwide take. are we silly rating the trend with shopping online, or -- are we accelerating the trend with shopping online? nikhil: you always have me on the show, and i'm always a bit irreverent. i don't spend a lot of time on valuations because you would miss the entire tech rally, as you and i would agree. i'm not so concerned about valuations.

what i want to look at is growth channels and regulations and changing government in the u.s. i think about what happened earlier this week, it suggests that big tech is not out of the government crosshairs. if you have a change in leadership in the u.s. with democrats coming in, that will put more pressure on big tex. to me -- on big tech. to me i think there will be a slowdown in business on time -- in time. -- i think we have to engage with society again, and that is why when i hear these commentaries on the virus, i just feel that engagement is part and parcel of human nature, and if you don't engage, you have job losses. if you don't engage, you have mental and psychological issues. i don't see tech going away. i don't see valuations as an issue. i think people will continue to

invest in tech. you have to invest in tech everywhere. i think the private markets are going to give you more upside on tech and the next two or three years in terms of private deals, than are the public markets. francine: what do you see as the legacy of this crisis? is it job losses, is it something else, or will we just eventually return back to normal? i know it is a very complicated question. questionbably a good if you need to look at trends for the future. francine: i think one thing -- nikhil: i think one thing before we speak about the consequences, the world is slowing everywhere. china, the u.s., europe, wherever. that is the first point. i think what is going to change, as i mentioned earlier, is that governments have to play a much bigger role in the economy in

the future. they are going to do it. mmt,nk with ubi, governments are going to be involved and supporting people for the next several years, in whatever shape or form. i think that changes everything. but this was coming. theink covid was accelerator, so to speak. so there is nothing wrong. spain has already introduced ubi, the u.s. has ubi, most countries do. take it away, i dare you to. i don't think it is going to go away. but this is important. i am not anti-ubi. my view is, with the world today we have to press on and move on and accept that. i am being a big live, but what i mean is that the french -- the u.s. was

half of that come or slightly higher. every government everywhere in the world, whether they can afford it or not, will become more involved in the economy. this is for the foreseeable future, next 3, 4, 5 years. francine: also just more interventionist governments. nikhil srinivasan, chief investment officer. as always, a great conversation. coming up, hong kong bars a dozen activists, including joshua wong, from standing for election. that is next. this is bloomberg. ♪

francine: francine: economics, finance, politics. this is "bloomberg surveillance." i'm francine lacqua, here in london. the hong kong government has denied attacking free speech after banning a dozen candidates from elections. stephen engle has been working --a special hong kong investigating the national security law in this new hour-long documentary i bloomberg. he joins us now for a debrief.

congratulations on the great documentary. what do the disqualifications mean for the opposition going forward? stephen: it is obviously a blow because last november there were district council elections, which were won overwhelmingly by the pro-democracy candidates. 80% plus with the district council, small level constituencies. but now the legislative council elections following on the heels of the national security law, whether it is polarizing or not, it is not that welcome here because it does take away many people's rights that were enshrined into basic law. many of the pro-democracy candidates have expected to, you know, still get that momentum from the district council elections and also the anger toward the national security law, and being swept into september 6.

at least 12 candidates have been disqualified, with the potential of more, and the reasons why they have been toast qualified -- have been disqualified, election officials said they could not determine that these candidates would give their full pledge of support to the basic law or to the national security law. so therefore they have been disqualified. of thewong, the face antigovernment protests over the last year, he had a press conference and he says this is the most scandalous election fraud in the history of hong kong. so it is yet another divisive development in this ongoing saga , which we explore in depth, of konge, in this show, "hong on edge 2," which debuted today. francine: it has been a months at the national security law was imposed. does it feel like the city is now being run by beijing? stephen: that is an interesting nominally,cause even

chief executive carrie lam is still the leader on most local affairs. but if you look at the national security law, which is overarching and fairly vaguely written -- of course, it counters the sessions, terrorism, collusion with foreign forces -- but again, the parameters on which they can apply that law are fairly wide. they have new legs at -- they have new heads at the liaison office as well as the affairs office in beijing. beijing is calling the shots. francine: thank you so much, stephen engle come our chief north asia correspondent. we will have plenty more from stephen throughout the day. "bloomberg surveillance" continues in the next hour. this is bloomberg. ♪

francine: high-tech -- amazon, apple, facebook, and alphabet top expectations as people increasingly rely on their products during lockdown. record slump -- france and germany suffer their sharpest gdp contractions on record. we're expecting more dismal european data later this in a couple of seconds. and bnp paribas reports a blowout performance in fixed-income trading, leading all but one of the large wall street banks. good morning and welcome to "bloomberg surveillance." i'm francine lacqua in london. tom keene is in new york. shrinking 12.1% in the second quarter matches the estimates that we have been speaking to. italy was ugly but better than expected, so it does seem that when you look at the overall picture, inflation, that inflation rate coming in at 0.4 percent, that is higher, a touch higher than expected. tom: this is economic data, and we need to do what we do at bloomberg, which is explained the way they quote gdp data